Designing tax systems for a green economy transitionhttp://www.eea.europa.eu/highlights/designing-tax-systems-for-a
Environmental taxes can contribute to a healthier planet and healthier people. They also spur jobs and growth, are easy to administer and difficult to evade. However, meeting EU climate and other environmental policy targets will erode the existing base for these sort of taxes. This and other systemic factors have implications for the design of future tax systems in Europe, according to an EEA report published today.The report, ‘Environmental taxation and EU environmental policies’ gives an overview of market-based instruments (MBIs), such as taxes, recycling fees, polluter-pays schemes or emissions trading permits, created under EU environmental legislation. It also analyses the current design and application of environmental taxes in EEA member countries and considers future prospects.

Energy, carbon and vehicle transport are the areas where environmental taxes are most commonly used and where the largest amount of revenue is generated. The analysis shows that resource and pollution taxes exist in the majority of the Member States and their revenue is limited, but they have a big potential to change behaviour towards circular economy and resource efficiency

The report stresses the value that environmental taxes play in decoupling pollution and resource use from economic development. For example, in Sweden, GDP has grown by 58% between 1990 and 2013 since the introduction of a carbon dioxide tax that contributed to a 23% reduction of greenhouse gas emissions over the same period.

Such taxes also contribute to healthier living and can spur eco-friendly technology and innovations that generate wealth and jobs. These in turn help Europe’s goal in moving toward a low-carbon and resource-efficient economy and in supporting the EU’s policies on growth, competitiveness and jobs and its Europe 2020 strategy aims. Environmental taxes are less distorting towards economic behaviour compared with labour and corporate taxes. They also have lower evasion rates and administrative costs.

Looking ahead, the report considers that improving environmental performance alongside demographic changes poses systemic challenges for policy makers in the field of taxation. New low-emission and low-carbon technologies in the industrial and transport sectors can lead to the erosion of the current tax bases in European countries. For example, the Dutch car registration tax scheme has influenced car buyers to purchase smaller, lower carbon emitting vehicles, which in turn has led to a reduction in tax revenues. Transport fuel tax revenues will also decrease when petrol and diesel sales fall as the EU moves towards its climate policy targets. At the same time, the share of the population that is elderly (> 65) will increase while the level of labour supply (age group 15-64) will decrease in most countries leading to a potential reduction in revenues from labour taxes.

The report recommends considering these and related challenges such as economic competitiveness and distributional implications together when policymakers study the potential for tax-shifting programmes between labour and environmental taxes in the design of resilient, long-term tax systems for a future green economy.

Other key findings

The report identifies 18 binding and 24 non-binding market-based instruments like levies, permits or taxes based on EU environmental legislation currently in force across EEA member countries.

Environmental tax revenue at the EU-28 level increased by 9.5% in real terms between 2002 and 2014 (an average increase of 0.8% per year).

There are differences between EEA member countries in terms of environmental tax revenues. In 2014, Denmark had the highest revenues percentage to GDP (4.1%) followed by Slovenia (3.9%), Croatia (3.9%) and Greece (3.7%). The EU 28 Member State average stood at 2.5% in 2014 compared with 2.3% in 2008.

Environmental tax revenues as a percentage of GDP in EU Member States, Norway and Switzerland, 1995–2014

]]>No publishergreen taxeslabour taxesenvironmental tax reformenvironmental taxesmarket-based instrumentslow carbon economy2016/09/06 08:00:00 GMT+1NewsEnvironmental taxation and EU environmental policieshttp://www.eea.europa.eu/publications/environmental-taxation-and-eu-environmental-policies
This report does three things. It provides an overview
of market‑based instruments (MBIs) established by
EU environmental legislation. Then it explains the
established definitions and rationales for the application
of environmental taxes and discusses their current
design and application in EEA member countries. It
concludes with overall findings and some reflections
on the potential for long-term tax-shifting programmes
in the context of policy targets as well as technological
innovation and demographic changes.No publishergreen taxestaxationenvironmental tax reformenvironmental taxesenvironmental policyeumarket-based instrumentslabour taxeslow carbon economy2016/09/06 08:00:00 GMT+1PublicationThe 'green economy' can encourage jobs and innovation - studyhttp://www.eea.europa.eu/media/newsreleases/the-2018green-economy2019-can-encourage
Europe can create jobs and encourage innovation by using resources much more efficiently, according to a new report from the European Environment Agency (EEA) which describes a range of policies with proven environmental and economic benefits. 'Resource-efficient green economy and EU policies' considers how European economies can drive more efficient material resource use as part of the transition towards a 'green economy', a recently stated aim of the EU.

While many environmental trends are gradually improving, the EU needs a more fundamental, systemic re-orientation of its economy if is to meet some of its long-term environmental objectives, the report states. For example, the proposed EU target to cut greenhouse gases by 80-95 % of 1990 levels by 2050 will not be possible by solely relying on incremental efficiency gains.

"Innovation may be the single most important driver to change the inefficient way we currently use resources," EEA Executive Director Hans Bruyninckx said. "Environmental innovation is key to address the challenges of the 21st Century. If we want to 'live well within the ecological limits of the planet' as stated in the 7th Environmental Action Programme, we will need to rely heavily on Europe's inventiveness. This is not just about new inventions – encouraging the uptake and diffusion of new green technologies may be even more important."

Another lever for improving resource efficiency could be to reduce labour taxes such as income tax, instead taxing inefficient resource use and environmental pollution. Such environmental taxes could encourage job creation but are under-used in the EU, equivalent to only 2.4 % of GDP in 2012. There may be multiple benefits - countries with the highest environmental taxes also seem to rank very highly for eco-innovations and competitiveness.

Strong environmental regulation can give the EU a competitive advantage as an early adopter, the report argues. Other regions which want to import products into the EU are gradually adopting European norms such as vehicle emissions standards or chemical controls.

The EU aims to increase the share of manufacturing to 20 % of GDP by 2020, from 15.1 % in 2013. This could be an opportunity to boost environmentally-beneficial innovation in areas such as renewable energy, according to the report authors. However, they warn that such growth must be consistent with EU environmental priorities, otherwise it could have negative consequences including increasing greenhouse gas emissions and wasting valuable resources.

The economic crisis and environmental efforts

The economic crisis seems to have had an effect on some environmental issues in the EU, including partially reducing emissions of greenhouse gases and some air pollutants. Nonetheless, in most areas Europe seems to be on a similar trajectory as it was before 2008, continuing long term trends; in some other cases the crisis seems to have slowed progress.

Following the 2008 financial and economic crisis there were some expectations that additional public investment could encourage more efficient resource use in Europe. However, indicator trends suggest that these efficiency gains have not occurred.

]]>No publisherfinancial crisisgreen economyindustryenvironmental tax reformenvironmental taxesfiscal policymanufacturing2014/07/14 15:55:00 GMT+1Press ReleaseGreen fiscal reform can create jobs and stimulate innovation across the EU http://www.eea.europa.eu/highlights/fiscal-reform-can-create-jobs
Increasing some tax rates and removing subsidies on environmentally harmful products and services can boost economic growth if the revenue generated is then used to relieve the tax burden on employment and investment.The findings come from a series of studies from the European Environment Agency (EEA) looking at the potential for fiscal reform in four EU countries affected by the current economic crisis.

Proposals for environmental fiscal reform received a positive reaction when presented to government representatives in Portugal recently, the latest country to be analysed by EEA. Since 2010, similar analyses have been undertaken and presented for Spain, Italy and Ireland.

Environmental fiscal reform (EFR) can encourage growth by reducing taxation on labour and investment – for example, income tax and corporation tax – and shifting the tax burden to the production and consumption of environmentally-harmful goods and services. Another feature of EFR is removing harmful subsidies, for example, those given for fossil fuels, and using the revenues saved to stimulate renewable energy and resource-efficient technologies.

Studies have demonstrated that environmental taxes can achieve environmental objectives at the same time as raising revenues. Modelling shows that they also have a less negative effect on GDP compared to other types of taxes, such as direct taxes, for example income tax, or indirect taxes such as value added tax. This crucial feature of environmental taxes means countries could use them to support either fiscal consolidation or to reduce other taxes.

Environmental taxes can change behaviour, encouraging consumers to redirect their consumption towards less taxed commodities. Such incentives would likely create both low and highly skilled jobs, for example in the recycling and energy efficiency sectors. The shift in taxation can also stimulate innovation in the longer term.

Jacqueline McGlade, EEA Executive Director, said: “European governments are looking for effective ways to create sustainable growth. Environmental fiscal reform is an idea whose time has come. Throughout Europe people are clearly very concerned that solutions to the crisis should be fair, so it is apt to make polluters pay the costs that they currently impose on the rest of society.”

Potential in Portugal

Portugal had the highest share of environmental taxes as a percentage of GDP of any Member State in the late 1990s. By using environmental tax approaches currently implemented in other EU Member States, Portugal could revert to this level, raising additional revenue of €3 billion.

Opportunities for Portugal include taxing diesel and petrol cars equally, and bringing in new taxes on a variety of goods including drinks packaging, shopping bags and pesticides. Further revenue raisers could include air travel taxes, an air pollution charge for heavy-goods vehicles and a royalty for old hydropower and other natural resources.

Environmentally harmful subsidies could be cut, the report says. Portugal spends more than most other Member States on subsidising private company cars. Portugal could also cut more than € 200 million of other environmentally-harmful subsidies, the report says.

Environmental taxation and the removal of environmentally harmful subsidies have been repeatedly emphasised as potentially integral parts of the European Semester. The measures can contribute to a wider fiscal consolidation process in Member States, while helping to restructure economies in line with resource-efficiency objectives.

]]>No publishergreen taxestax reformenvironmental tax reformgreen economytaxes2013/05/14 09:35:00 GMT+1NewsShifting taxes from labour to resource consumption - Jacqueline McGladehttp://www.eea.europa.eu/media/audiovisuals/shifting-taxes-from-labour-to-2/view
What is Environmental Fiscal Reform? And how could fairer taxes benefit the environment? We have asked few questions to EEA Executive Director Jacqueline McGladeNo publisherenvironmental taxesenvironmental tax reform2012/06/17 23:00:00 GMT+1VideoShifting taxes from labour to resource consumption - Gerben-Jan Gerbrandy http://www.eea.europa.eu/media/audiovisuals/shifting-taxes-from-labour-to-1/view
What is Environmental Fiscal Reform? And how could fairer taxes benefit the environment? We have asked few questions to Gerben-Jan Gerbrandy, Member of the European Parliament.No publisherenvironmental taxesenvironmental tax reform2012/06/17 23:00:00 GMT+1VideoShifting taxes from labour to resource consumption - Janez Potočnik http://www.eea.europa.eu/media/audiovisuals/shifting-taxes-from-labour-to/view
What is Environmental Fiscal Reform? And how could fairer taxes benefit the environment? We have asked few questions to Janez Potočnik, European Commissioner for the EnvironmentNo publisherenvironmental tax reformJanez Potocnik2012/06/17 23:00:00 GMT+1VideoTax on pollution can support innovationhttp://www.eea.europa.eu/highlights/environmental-tax-reform-increasing-individual/key-facts/tax-on-pollution-can-support-innovation
By increasing tax on pollution and other environmentally-damaging activities, governments can use the extra funds to provide incentives for innovation, such as developing renewable energy. For advanced economies like the EU, such schemes also create new technologies which can be exported globally.No publisherETRenvironmental tax reform2012/01/09 14:09:38 GMT+1SOER 2010 Key fact (Deprecated)Environmental tax reform: increasing individual incomes and boosting innovationhttp://www.eea.europa.eu/highlights/environmental-tax-reform-increasing-individual
European governments could simultaneously reduce income tax, increase innovation and cut pollution by introducing well-targeted environmental taxes and recycling the revenues back into the economy. This was one of the findings from a pair of reports on environmental tax reform (ETR) published today by the European Environment Agency (EEA).Environmental tax reform is defined as 'reform of the national tax system where there is a shift of the burden of taxes, for example from labour to environmentally damaging activities, such as unsustainable resource use or pollution'.

There are at least four possible types of effects of ETR. The first effect is to make various goods or activities more expensive, while the second effect comes from the direct or indirect distribution of this extra revenue. Thirdly, job creation and eco-innovation may be another result of this process. And lastly, effective ETR will also result in environmental benefits, for example by reducing pollution.

Environmental taxation also has an important role to play in spurring innovation, according to a broad range of studies. By increasing tax on pollution and other environmentally-damaging activities, governments can use the extra funds to provide incentives for innovation, such as developing renewable energy. For advanced economies like the EU, such schemes also create new technologies which can be exported globally, the reports say.

The reports also look at ETR in practice across Europe. Analysis of policies in Germany and the Netherlands showed that ETR and other environmental policy instruments have broadly positive effects in increasing innovation. The wider economic effects of ETR have also been analysed in Germany, where environmental taxation cut pension contributions and created an estimated 250 000 jobs.

One of the challenges of ETR is ensuring the costs and benefits are appropriately distributed across society, and do not negatively impact the poorest people. Instruments also need to balance the right mix of environmental and economic incentives. Ultimately, ETR mechanisms can only be implemented if they are acceptable to the public and policy-makers.

Modelling the impact of environmental tax reform

The EEA calculated the impact of a tax on energy and other resources, with the revenues used to cut social security payments and income taxes. The model indicated that this fiscal reform would result in financial benefits for almost all socio-economic groups. However, in a few countries the poorest people could see negative effects, as these people spend a higher proportion of their income on energy.

Increasing the cost of emitting carbon could also have a negative effect on the poorest groups, according to a Germany-based modelling study. However, the scenario shows that the worst-hit parts of society could lose just 1 % of their disposable income in 2020, so it would be relatively simple and affordable to compensate the affected groups via targeted benefit transfers.

Furthermore, the reduction in social security payments means labour costs decrease, boosting employment – the model suggests that increasing the price of emitting one tonne of carbon dioxide to €68 by 2020 could create 152 000 additional jobs in Germany.

The modelling exercise also analysed the effects of applying ETR to meet the EU target of reducing greenhouse gases by 20 % by 2020. This scenario looked at the effect of taxing emissions, with the revenues used to support innovation and reduce income tax and social security costs. The model showed that the policies would increase employment by more than 1 million jobs, with only a small (0.04 %) cost to GDP to achieve the 20% GHG reduction target at EU level.

]]>No publisherETRgreen growthgreen economyenvironmental tax reformenvironmental taxeseconomic policy instruments2012/01/09 11:00:00 GMT+1NewsEnvironmental tax reform in Europe: opportunities for eco-innovationhttp://www.eea.europa.eu/publications/environmental-tax-reform-opportunities
Environmental policy instruments are frequently
characterised as obstacles to economic activity but environmental
taxes can, in fact, be the opposite — serving as
catalysts for the creativity that underpins thriving
economies.No publishertechnological innovationgreen taxesenvironmental tax reformpolicy evaluationeconomic growthenvironmental taxes2012/01/09 11:00:00 GMT+1PublicationEnvironmental tax reform in Europe: implications for income distributionhttp://www.eea.europa.eu/publications/environmental-tax-reform-in-europe
Although environmental tax reforms (ETR) tend to improve incomes across society, they can have mild regressive impacts in that richer households gain more than poorer ones. Care is needed to design ETRs in ways that ensure that certain groups are able to benefit equally. ETR's overall benefits for the economy, environment and society are potentially significant. ETR should therefore be regarded as a key element in the policymaking toolkit for shifting to a green economy.No publisherresource usegreen economyenergy pricesgreen taxessocial equityenvironmental tax reformsocial inequalitiesenvironmental taxeshousehold consumptionconsumer pricespollution2012/01/09 11:00:00 GMT+1PublicationThe difficulties in implementing an eco-tax reformhttp://www.eea.europa.eu/media/audiovisuals/the-difficulties-in-implementing-an/view
Michael Jacobs is Visiting Professor at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics. He answers the question "In your opinion, what are the difficulties in implementing an eco-tax reform? "No publisherenvironmental taxesenvironmental tax reform2011/09/15 23:00:00 GMT+1VideoThe carbon tax experience in British Columbiahttp://www.eea.europa.eu/media/audiovisuals/the-carbon-tax-experience-in/view
No publisherenvironmental tax reform2011/09/15 23:00:00 GMT+1VideoGermany's and Asia's recent developments in environmental taxationhttp://www.eea.europa.eu/media/audiovisuals/germanys-and-asias-recent-developments/view
Kai Schlegelmilch is an economist and vice-president of Green Budget Europe. He has advised governments in China, Vietnam and Thailand regarding the introduction of environmental taxation on behalf of the German International Cooperation. Formerly, he worked for the Wuppertal Institute for Climate, Environment, Energy and the European Environment Agency in Copenhagen.No publisherenvironmental taxesenvironmental tax reformgreen taxes2011/09/15 23:00:00 GMT+1VideoWhat are the challenges in persuading governments to adopt an eco-tax reform? http://www.eea.europa.eu/media/audiovisuals/what-are-the-challenges-in/view
Prof. Mikael Skou Andersen, senior economist at the European Environment Agency, answers two questions:
- what are the challenges in persuading governments to adopt an eco-tax reform?
- will environmental taxes be an additional burden on the taxpayer?
Prof. Mikael Skou Andersen is an environmental economist and policy analyst at the European Environment Agency. No publisherenvironmental taxesenvironmental tax reformgreen taxes2011/09/15 23:00:00 GMT+1VideoWhat is an eco-tax reform? http://www.eea.europa.eu/media/audiovisuals/what-is-an-eco-tax-reform/view
David Gee explains the basic principles of an environmental tax reform. David is a senior adviser for science, policy, and emerging issues at the European Environment Agency. No publisherenvironmental taxesenvironmental tax reformgreen taxes2011/09/15 23:00:00 GMT+1Video